To celebrate the country’s 44th anniversary, Kippreport brings you some interesting details about the EmiratesDecember 1, 2015 5:27
What to expect in 2014
By Ahmed Sultan bin Sulayem, executive chairman at DMCC, the UAE’s fastest-growing and largest free zone.
December 24, 2013 12:37 by kippreport
In my first column, I made a commitment to Kippreport.com’s readers to share information of value.
With only a few days to go of 2013, I would, therefore, like to share a review of the year and a few thoughts on 2014.
This year will be remembered for being the end of a long and fruitful journey of one of Africa’s prominent sons and a great leader, Nelson Mandela. As the world gathered to celebrate his life and legacy, it is important to never forget what he stood for – equity, integrity and freedom, values that apply across politics, business and life in general.
It also marked the gradual improvement of the US economy. With a 1.5 per cent expected growth, households are in better conditions, while confidence is growing. The country has lowered its debt, benefited from the route to recovery of the housing market and strong performance of the stock market. Most importantly, the current unemployment rate in the US is the lowest in five years.
In Europe, the availability of credit continues to be a challenge, where austerity and other policy actions aimed at stabilising financial conditions and reducing risk are becoming the norm. Marginal growth of one per cent is forecasted.
China and Japan’s re-modelled fiscal stimulus and monetary policies have helped push for a two per cent and seven per cent growth respectively. India, one of Dubai’s biggest trade partners, experienced a record-high current account deficit (CAD) of 4.8 per cent GDP, equivalent to $88 billion, between April 2012 to March 2013. In order to curb such a high CAD, the government has increased import duties on gold and devalued the rupee. The Reserve Bank of India predicts a five per cent rate of growth, which is the lowest in one decade.
The UAE’s projected growth is 4.4 per cent, putting it in the same bucket of countries that have been able to bounce back comfortably after the global financial crisis. Growth in Saudi Arabia, the largest economy by GDP in the GCC region, is expected to fall from five per cent in 2012 to four per cent by the end of 2013. Depleting infrastructure and volatile commodity prices in Latin America and the Caribbean have led to a slow growth of 2.7 per cent in 2013.
Overall, emerging markets are on the path of witnessing a 4.5 per cent growth as a result of improved domestic demand, socio-political systems and strong financial regulations.
Furthermore, trade and commodities have played a pivotal role in the performance of the global economy. The trade-facilitation measures agreed in Bali by the World Trade Organisation members are estimated to cut the cost of shipping goods around the world by more than ten per cent, which would raise global output by more than $400 billion per year and, in turn, create new opportunities for least developing and developing countries in general.
As for commodities, more specifically diamonds and gold, 2013 was a challenging year. Diamonds witnessed an increase in rough prices by approximately ten per cent, as a result of a decrease in mines found and diamond financing liquidity tightening. However, surprisingly, in an opposite tangent, the prices for 0.5, one and three carat polished diamonds have fallen respectively by 1.5 per cent, 4.7 per cent and 2.9 per cent year-on-year. The price of gold has performed below market expectations, as it fell below $1,200 per ounce for the first time since 2010. A number of factors can be linked to this fall, some of which are the increase in gold import duty imposed in India (the largest consumer of gold in 2012), recovery of the US equity markets, tapering in the US and strong performance of the price of agriculture commodities.
The year ended on a high note in the Middle East region, with Dubai winning the bid to host the World Expo 2020. This is an amazing achievement, as it is the first time a city from the Mena region or South Asia has been chosen by the international community to host an event of such magnitude. This win is also a testament to Dubai’s position as more than just a transfer point between the East and West, and truly supports the vision of Dubai’s leadership to become the new economic centre of the world, constantly connecting global minds and building the future.
At DMCC, on July 2, 2013, we announced our plans to build the world’s tallest commercial tower as part of our free zone business park expansion and provide for the rising demand for commercial space within DMCC. We subsequently also named the tower ‘Burj 2020’ in honour of the successful expo bid.
With the US growing, Europe restructuring, emerging markets stabilising and the Expo 2020 on the horizon, we can expect the years ahead to be fruitful, as well as demanding, with plenty of challenges that will bring many opportunities.
Wishing you all the best for the new year.